A collection of observations, news and resources on the changing nature of innovation, technology, leadership, and other subjects.

July 14, 2005

Services Sciences, Management and Engineering

In his best seller "The World is Flat," Thomas Friedman writes (p. 46) about the "flattening of the world" as one of those disruptive, dislocating technological revolutions, like Gutenberg's printing press and the Industrial Revolution, that changes civilization in profound ways. But what is going on right now is qualitatively different, he proceeds to say, because of the speed and breadth with which it is taking hold.

I enjoyed reading Tom's book a lot, and not just because I so strongly agreed with his points. In recent talks I have been saying that we might be at the onset of a technology-enabled revolution that could have the impact on the 21st century that the Industrial Revolution had on previous generations. I struggled with what to call this 21st century revolution -- until a colleague pointed out that it is up to future historians to name such societal changes, once it is clearer what they were and what their impact was. In my talks, I have been using either Internet Revolution -- because I think that the explosion of the Internet in society around the mid '90s is what got things going in earnest -- or Business Process Revolution -- because, while the Internet and other technology advances have been the catalysts for change, the major transformations are taking place "up the stack" in businesses, industries, and whole economies. The overall net effect is to link people, processes and information everywhere, i.e., to essentially flatten the world.

There is general agreement that the Industrial Revolution was both enabled and significantly accelerated by advances in science and engineering. Steam power and machine tools of all kinds were largely responsible for the increases in productivity and standard of living that accompanied the Industrial Revolution. Artisans transformed themselves into professionals, practical thinking became more scientific, and university trained engineers were able to design solutions to increasingly complex problems.

Once more we need science and engineering to help us advance a revolution. But this time, they need to be applied to the labor intensive services that dominate our economies. Services now account for over 2/3 of the labor force in advanced countries like the US and the UK. And services represent an increasing portion of business revenues -- for instance, more than 50% of IBM's revenues now come from services.

With information technologies now playing the role of our steam power and machine tools, we need to evolve from today's rather labor-intensive and one-of-a-kind approaches to services to approaches that rely on sophisticated tools, disciplined processes, and standard components. We need more science and engineering in the design, building and deployment of the end-to-end business solutions we are after. Otherwise, their complexity and costs will be a major impediment to progress.

In IBM, we have started to use the framework of Services Sciences, Management and Engineering (SSME) to describe these emerging efforts, as well as to help create a true academic discipline around them. We are pursuing SSME activities across the company, from our R&D labs to our Global Services organization, as well as in our work with universities and other research institutions. We want to encourage lots of discussions around SSME such as how the discipline should evolve, its key priorities, curricula for students and practitioners, opportunities for collaboration, and so on.

Helping to organize SSME efforts both within IBM and working with universities around the world is one of my highest priorities. This 21st century revolution, no matter what you call it, will not happen, at least not in the positive way we envision it, unless the revolution is accompanied by the needed science and technology to help us solve the increasingly complex problems facing us, and design and build the needed sophisticated solutions. This is one of the toughest and most exciting challenges ahead of us all.

Comments

I like this expression: “flattening of the world”. As marketing student attending an International course I have classmates coming from all over the world. We often use the Internet to communicate with each other. Technology will help us stay in touch with each other and reduce the geographical distances that will arise when at the end of the course many of us will go back to their countries. Thus I agree when we say that technology can “flatten the world”. Nevertheless I would like to add a few words with regards to the relationship building process prior to communication. When people come from different countries, cultures, religions and socio-economic backgrounds much effort is required to build a relationship of mutual trust and respect. I can remember all the discussions had with my fellow colleagues and the compromises that on both sides have been accepted in order to enjoy each other’s company. Irving, as you said “there is probably no more powerful agent for innovation -- in any field -- than an open mind”. I think that the extent to which technology will enable us to get closer to each other and ease the information exchange process will depend on our willingness to accept diversity. I can have a real conversation on messenger with my Libyan friend Jamal only if we have already stretched and open our minds towards each other’s point of views.

When it comes to service marketing I think that nothing really changes. Let’s take for instance Singapore Airlines (SIA), an extraordinary service company. SIA is famous for its heavy investments in technology which enables the company to deliver outstanding services. What has to be notice is that this company comes from the Republic of Singapore which has always been a multi-racial society and therefore SIA is not scared by cultural diversity and employs people coming from anywhere in the world looking only at their talent. SIA has turned the “hassle factor” of cultural diversity into “productive friction” by creating flexible structures of work where people change working environments periodically and adapt themselves to succeed. In a nutshell, they have created an environment where changing is a way of living. The reason why SIA can adapt technology to different customer needs depends much on its employees’ capacity to interpret and respect the cultural differences among customers.

I think that whether or not technology will enable us to face the challenges of the future, in society as well as in business, will also depend on our capacity to understand and leverage diversity.

The shift in the world's workforce from agriculture to manufacturing to services over the past two hundred years is truly astounding. Especially, considering the world's population has gone from one billion to six billion people during that period -- productivity gains in agriculture and manufacturing have played a key role. Thomas Friedman's book "The World is Flat" does a good job of exploring the shift and its implications.

The SSME website at http://www.research.ibm.com/ssme is one good place to get information about how IBM is interacting with academics, industry, and government to coproduce an SSME research agenda and curriculum. Let's be clear, this work will take a lot of stakeholders working together over multiple years to accomplish the ambitious goal.

What will be the breakthroughs that allow systematic approaches to investing in service innovation and then to get predictable returns? For example in manufacturing of semiconductors, Moore's Law provided the basis of an investment strategy to shrink transistors and get predictable capability and cost improvements, year after year. What understanding of services might allow predictable service productivity and service quality gains? An understanding of outsourcing and its relationship to Coase's Law is one piece of the puzzle. There are many other pieces to the puzzle, and this will be an exciting frontier for IBM Research to explore with IGS and the other divisions, as well as academic, industry, and government stakeholders.

To capitalize on these advances in knowledge will mean gaining a better understanding of the relationship of technology innovation, business model innovation, social-organizational innovation, and demand innovation (new needs from the clients). Service innovations are about new models of work sharing (with other countries or automation and technology) and risk sharing (with clients, partners, and employees).

Historically, IBM was a partner with academics, industry, and government in establishing the discipline of Computer Science, more than a half century ago. Now, IBM can play a role in helping to establish SSME, especially in the area of Knowledge-Intensive Business Services (KIBS) that impact Business Performance Transformation Services (BPTS).

"The possibility of a software industrial revolution, in which programmers stop coding everything from scratch and begin assembling applications from well-stocked catalogs of reusable software components, is an enduring dream that continues to elude our grasp. Although object-oriented programming has brought the software industrial revolution a step closer, common-sense organizational principles like reusability and interchangeability are still the exception rather than the rule."